Mumbai: The Rupee drew support from firm Asian stock markets and rose on Monday as traders hoped for capital flows into local equities, but concern about a political impasse and US subprime market woes weighed.
At 9:40am, the rupee was trading at 40.8950/9000 per dollar, strengthening from Friday’s 41.0825/0925. It hit a nine-year high of 40.20 last month, but has since slipped on waning appetite for emerging market assets.
“The market is going to yo-yo for a while — it’s not conclusive what direction the rupee is going to take in the near term,” said a senior dealer with a private bank.
Asian shares were higher on Monday on the back of a Wall Street rally triggered by strong economic data which calmed some worries about the health of the US economy.
This sparked expectations that overseas investors would move funds into India, though foreigners have pulled $2.3 billion from local equities this month, cutting their net purchases since end-2006 to less than $8 billion.
Overseas investment flows have been a key driver of the rupee, which has gained more than 8% against the dollar this year.